Frozen with Fear

As the new owner of $172.5 billion of preferred shares and warrants in 208 U.S. financial institutions, the Treasury Department hasn't succeeded in thawing frozen credit markets, leaving taxpayers propping up an industry that won't lend to them.

While inter-bank lending rates have fallen since Congress approved the $700 billion Troubled Asset Relief Program Oct. 3, most bank lending to consumers remains tight and interest rates high. The average credit-card rate was 14.33% on Dec. 16, according to IndexCreditCards.com in Cleveland, almost unchanged from 14.41% in October 2007.

That's prompted criticism from Alan S. Blinder, a professor of economics at Princeton University in New Jersey and a former Federal Reserve vice chairman, who says the government should take a more active role as a stakeholder in the nation's banks.